Tracking trolls since 2001.

Month: November 2014

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There’s a gentleman who I “internet know” and we’ll call him Paul Morinville, mostly on account of that’s his name. Paul is an inventor and holds at least one patent. I do not have permission to share the exchanges we’ve had by email, and therefore I don’t feel comfortable getting into his whole story here. I’ll leave that to you in the comments, Paul!

I can tell you that his concerns about patent trolls, which I’m fairly certain he believes do not even exist which is why there’s no formal definition that he will accept, stem from having his inventions used by big players in the market without regard to his actually having invented them. From his perspective, Big Companies steal from inventors on a regular basis and therefore inventors need a way to go after them without being called patent trolls. Even though no such thing exists. According to him.

I get that, wrote about it, and didn’t bother printing t-shirts because is that even a thing anymore? No one is arguing logically that small inventors need a way in the door to larger companies, or at least no one should be. The Backgrounder has been a link on this blog since it began over three years ago, this is not news. But you cannot say that because there is are legitimate businesses out there set up to help the little guy that some of those business aren’t started to help, oh, I dunno, themselves. That’s what patent trolls are, and that’s part of what I would call an “official definition”.

Let’s not confuse “official definition” with “litmus test”. I’ve talked with Lenny Kravets via twitter and we both agree that a single test does not exist to determine who is and is not a troll. It would be super convenient if there were, but alas life is not that simple. But I think that we can get pretty close to a definition of a patent troll that is acceptable to everyone, even Paul.

I’m going to give it a shot here, because that’s how I roll:

Patent Troll, n –

1/ A company or individual who, using patents that either never should have been issued or are broadly constructed (intentionally for the purpose of misuse, or as a result of poor USPTO patent examination practices), sends letters to various and sundry companies and/or individuals that simultaneously request license fees and threaten legal action if the recipient fails to respond correctly by paying up and who will, in the face of inaction by a demand letter recipient, actually file suit in Federal District Court, the District of East Texas being the most popular venue.

2/ A company set up to act as a cover for large corporations who try to breathe new life into older patents which they would ordinarily let expire but, as a result of greed and/or pressure from Wall Street, have decided are ripe for assertion or litigation.

I believe the reason that inventors are all up in arms about patent reform is that they think it will hurt their ability to go after larger corporations that steal their stuff. Pulling out my broken record here, I’ll say that I once again agree that any reform out of Congress is going to have it’s butt handed to it by the Law of Unintended Consequences faster than a Thanksgiving turkey disappears. Capital Hill is not the place to solve this problem, the market is.

Ideas can be stolen?! What next, someone will steal my feelings?! I’ll never feel again! – by Bengie

and

1) Coming up with your own idea independently is not stealing. (Even if you were not the first to ever think of it.)

2) Ideas are a dime-a-dozen, as any VC will be happy to explain, and de minimis non curat lex. (The law does not concern itself with trifles.)

Implementation and execution are what have value. – by OldMugwump

Right and right.

Though I think my attempt above is rather valiant, probably the best definition of a patent troll is similar, as I’ve previously pointed out, to the definition of obscenity:

I’ll know it when I see it.

Maybe by using the definition above or parts of it, we can come to some agreement? Because as much as Paul would like to assert that they don’t exist, covering your ears and closing your eyes doesn’t make it all go away, my friend. Trolls are out there, most assuredly.

Even so, having said all that, the point I made in my previous post on a definition of patent troll is still my favorite:

The way you determine whether a company is a patent troll is not by a single definition, it’s by a pattern of behavior over time, by looking at the results of that behavior and ascertaining “Is this behavior that is good for American businesses or is this behavior that gets in the way of progress?” In a lawsuit it’s the stage where you “prove up” your case.

So how do we do that with trolls? I’ll tell you how: we enter demand letter data and over time, the question of what is a troll, never mind who is a troll, will all but answer itself. We build a community around how these guys behave…what they ask for in settlements, what they demand in their initial leaflet drop from their G-5′s, how they handle their claims construction when things get to litigation, the list goes on. By looking at behavior over time we will be able to tell which companies are the real villains, and which are just victims of circumstance.

Remember when the FTC decided it was going to get all “gimme gimme gimme” with the information about the patent troll business model and possibly start subpoena-ing said information? No? Here’s a refresher.

Well low and behold, I get a tip from an anonymous source that a certain company received a request from an NPE to permit disclosure of a license agreement to the FTC. We don’t know yet if it was the result of a subpoena but does that even matter because “Hello, shot across the bow.”

Turns out? This original company was not the only one, either. There are subsequent reports of a couple of other companies receiving something similar.

So is the FTC holding to its guns, so to speak, and going after the guys in the black hats? Do we want them to? I struggle with that because on the one hand, it’s a pain point for trolls to have to comply with their heavily detailed ask. I have no shame in admitting that I like to see companies who inflict pain for no other reason than monetary gain suffer like a bald man in the hot sun with no hat.

But on the other hand, government involvement in business practices that are, right now, not illegal is kinda Big Brother-ish.

Either way, there are two important takeaways:

Patents trolls are in the cross-hairs of more than one governmental agency and this, generally speaking, spells doom

This news feels like the day I found out who the original troll tracker was or the day I found out about the results of the Nortelauction. In a word? Significant.

A. Acacia Media is the country’s largest patent troll? What? When did they usurp the throne from my favorite CEO-turned-world-infamous-chef Nathan Mhyrvold, et al at Intellectual Ventures?

and it’s sometimes considered the largest “patent troll,” since its various subsidiaries have filed more patent lawsuits than any other single company.

How can they have more subsidiaries than IV? Or rather, how can their fewer-than-IV-subsidiaries have filed more lawsuits than IV’s? It’s possible and highly likely because Joe’s a very thorough guy and wouldn’t say that if it weren’t true. It’s just surprising that I didn’t know that because I pride myself on knowing all the things about all the trolls.

Joe 1, Pride 0.

2. Judge Gregory Sleet should get an award for nailing down the troll problem with a single paragraph. I, of course, did it in 17 words but who’s counting? Anyway, what he said regarding this case needs to be spliced up, put on a series of sandwich boards, and paraded in front of every Federal District Court every single day until it has been memorized by all of the judges and regurgitated verbatim every time a troll files a lawsuit:

The facts of this case demonstrate that Summit pursued an action against NetApp without any basis for infringement, delayed disclosing the existence of the Licensing Agreement for eighteen months, extracted settlements from co-defendants worth a fraction of what it would actually cost them to defend the lawsuit, and then voluntarily dismissed its claims with prejudice prior to the court issuing a ruling on the merits… The claims were frivolous—Microsoft’s initiator software [was] licensed, so no system employing it could infringe the asserted patents. Summit’s motivation was to extract quick settlements that were dwarfed by the costs to litigate. Summit was objectively unreasonable in bringing a lawsuit against NetApp mere months after executing the Licensing Agreement that effectively eliminated its theory of infringement. Finally, the court is convinced that an award of attorneys’ fees in this case is necessary to deter this sort of reckless and wasteful litigation in the future.

Summit’s expert said that Microsoft users infringe the patents, but he couldn’t determine whether Linux or UNIX systems infringed because he “didn’t have time.”

Let’s run that through the Patent Troll Translator™, shall we?

“Seriously? You expect me to dig through and find out if these people have actually infringed? Please. Just pay up, dude, and it all goes away.”

One last thing that’s curious…the article states that RPX took licenses to the two patents in the suit (7,392,291 and 7,428,581) and that NetApp therefore (as an assumed subscriber of RPX’s) already had a license. RPX purchased PriorSmart which sends out a daily recap of recently filed patent litigation.

I can’t find Summit or Acacia Media listed in any of their emails as having sued NetApp.